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ICE Cotton Ends Mixed on Demand Concerns, U.S Crop Progress Report

30 Jun 2020 8:54 am
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Mumbai (Commodities Control) – Cotton trading starts the new week mixed. July and October futures traded lower on limited open interest; while the deferred contracts closed 13 to 28 points higher.

ICE cotton futures fell on Monday as a spike in coronavirus cases in the United States stoked demand concerns for the natural fiber, ahead of the release of the planted acreage data.

The weekly Crop Progress report had cotton squaring at 35%, which is 1 ppt below average. NASS noted that 9% of 2020 cotton was setting bolls as of June 28, the average is 7%.

July Cotton closed at 59.62 cents, down 93 points. October Cotton closed at 60.13 cents, down 13 points. December Cotton closed at 59.63 cents, up 13 points and March 21 Cotton closed at 60.29 cents, up 13 points.

"There are a lot of demand worries; the number of coronavirus cases are expanding in the U.S., throwing various states into doubt," said Jack Scoville, vice president at Chicago-based Price Futures Group.

The contagion, which has infected over 2.5 million people in the United States and killed 125,000, has drastically reduced demand for apparel, sending prices of the natural fiber tumbling 16% so far this year.

December cotton, however, did draw some support from a recovering Dow Jones. After trading 200 down on its Sunday night, the Dow sharply recovered (up 400) on the backs of Boeing and Apple. No doubt a rising stock market, to some degree, helped cotton improve.

Cotton speculators raised their net long position by 935 contracts to 1,487 in the week to June 23, data from the U.S. Commodity Futures Trading Commission showed.

Total futures market volume fell by 1,987 to 6,441 lots. Data showed total open interest gained 268 to 159,197 contracts in the previous session.

On July 10, USDA will publish its latest supply-demand numbers. One great concern within the cotton industry is the very large projected carry outs. As of the last recording, U.S. stock was projected at 8.0 million bales, while world carry was pegged at 104.50 million bales. In addition, as long as the overshadowing COVID-19 persists, the demand world may be subject to more curtailment.

Support and Resistance for Cotton #2 (December) lies at 58.53 cents and 60.27 cents per lb, respectively.

(Commodities Control Bureau)

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